Communism, Marxism, Socialism, Capitalism, What are your thoughts?

[REDY]

Actually, it's the creditors of a modern corporation who assume the risk. Shareholders have limited liability in almost all modern businesses. And that's without getting into government and central bank bailouts when things turn south.

And it's also false that shareholders necessarily have anything to do with financing the actual operations or plant of a company. I can become a shareholder in a company today by paying some money to an existing shareholder. I will then be entitled to a share of the profits despite doing absolutely nothing to contribute to creating the capital used by the company.

True, but how is it different? The point is that public companies would never allow risk. There would be not any facebook or uber.

And realistically speaking, the loss of a job, the only source of income, is typically a far greater risk for a worker than the loss of investment income from a firm is to someone who derives most or all of their income from owning assets.

How the job should be the only source of income? This sounds too medieval. But still, even this guy will get an another job. But the investments would be gone.

 

[El_Machinae]

I've been in all three positions:

I've desperately needed the job while management was trying to re-invent the company's earning stream. They truly needed the business to survive as well.

I've been the capitalist that had my own credit on the line, drawing down personal savings to work for the company at zero salary

I've owned shares in a company that suddenly couldn't handle their liabilities. The management could probably have lived off of the interest in their bank account.

The first two just don't compare to the third. My share ownership was part of a diversified portfolio, it sucked but it was just savings I could rebuild. But the first two were constantly the equivalent of feeling like you're desperate to get out of a hole.

A lot of the world is built by people in the first two groups. And we are constantly tricked into feeling sorry for the third as if they're the ones taking all the risks.

 

[BOBAH1]

Communism for workers and people of integrity, but capitalism for rich mans. its over.

 

[Birdjaguar]

I've desperately needed the job while management was trying to re-invent the company's earning stream. They truly needed the business to survive as well.

I've been the capitalist that had my own credit on the line, drawing down personal savings to work for the company at zero salary

I've owned shares in a company that suddenly couldn't handle their liabilities. The management could probably have lived off of the interest in their bank account.

The first two just don't compare to the third. My share ownership was part of a diversified portfolio, it sucked but it was just savings I could rebuild. But the first two were constantly the equivalent of feeling like you're desperate to get out of a hole.
A lot of the world is built by people in the first two groups. And we are constantly tricked into feeling sorry for the third as if they're the ones taking all the risks.

It is one thing to start a business when you have money and the risk is just some percent of it. It is quite another to start one knowing that you will be dependent upon success to pay your bills. 20 years ago I launched a small specialty manufacturing company and financed it with CCs. I had six employees. They all got paid every week; I did not. I only took money when cash flow was sufficient. It was challenging and great fun, but mostly hard work. One of my customers was a pain in the butt and always wanted his orders to go the front of the production line. At times I could, and charged him a premium. After three years, he got tired of paying those premiums, so I sold him the company and he got his products at cost. I paid off $30k in CC debt and moved on. Risk is a significant element of owning a business. It changes one's behavior and shapes decisions. Most folks are risk averse and don't want any part of it if the financial consequences are real. I'm a thoughtful risk taker. When offered the opportunity, none of my workers had any interest in taking on any aspect of the company's risk. All they wanted was a weekly check.

 

[Traitorfish]

True, but how is it different? The point is that public companies would never allow risk. There would be not any facebook or uber.

I don't know how you're defining "risk", but the public sector put a dude on the moon.

 

[El_Machinae]

I think we're seeing that there are two types of Skin in the Game. And it's a Sorites Problem. There's a transition from actually wanting or needing the income from a venture to come through to just watching numbers on a screen go up and down. The rich person might still feel an emotional need to protect those dollars - they probably still do - but it's just not the same thing.

As well, when you're a small-level entrepreneur, you have an emotional attachment to your employees in a way that just doesn't happen at scale. The dollars themselves are sociopathic - they're go where they will based on people's choices. But individual workers can have good working conditions or bad working conditions. The conditions can be exploitative in a technical sense to truly exploitative. And people's skin in the game can be real or it can just be some abstract thing.

We once had an investor borrow against his house to buy into our project. He also had a portfolio of other people's money that he was investing with us. I don't know those peoples' story, but I cannot see it as anything other than idle cash. But the bottom fell out of our project and he walked away, I did feel bad for him even though those dollars had paid part of my salary.

But, back to Skin in the Game. Once someone is too insulated from the outcome of the investment, the process breaks down. Heck, I'm used to the Canadian system of labour, so being told I'd 'own' a portion of the company I work for would normally trigger alarms. I'd rather get paid in dollars so that I can diversify my savings rather than not only have my income AND my savings tied to the success of my local economy.

 

[Birdjaguar]

I think we're seeing that there are two types of Skin in the Game. And it's a Sorites Problem. There's a transition from actually wanting or needing the income from a venture to come through to just watching numbers on a screen go up and down. The rich person might still feel an emotional need to protect those dollars - they probably still do - but it's just not the same thing.

As well, when you're a small-level entrepreneur, you have an emotional attachment to your employees in a way that just doesn't happen at scale. The dollars themselves are sociopathic - they're go where they will based on people's choices. But individual workers can have good working conditions or bad working conditions. The conditions can be exploitative in a technical sense to truly exploitative. And people's skin in the game can be real or it can just be some abstract thing.

We once had an investor borrow against his house to buy into our project. He also had a portfolio of other people's money that he was investing with us. I don't know those peoples' story, but I cannot see it as anything other than idle cash. But the bottom fell out of our project and he walked away, I did feel bad for him even though those dollars had paid part of my salary.

But, back to Skin in the Game. Once someone is too insulated from the outcome of the investment, the process breaks down. Heck, I'm used to the Canadian system of labour, so being told I'd 'own' a portion of the company I work for would normally trigger alarms. I'd rather get paid in dollars so that I can diversify my savings rather than not only have my income AND my savings tied to the success of my local economy.

But as a worker you are entitled to the joys of ownership and the accompanying risk; in fact, aren't you being negligent in not taking on those burdens and being a model for the uneducated workers who have been duped into accepting uncertain, but currently steady paychecks?

 

[El_Machinae]

I'm not sure it works in the Canadian system as it would work as they imagine. For example, my savings are mobile after I leave my previous job. But the socialist ownership wouldn't be. So, if a Canadian company wanted to include partial ownership as part of the incentive structure, I'd be cautious. But I'd be assuming that I wouldn't lose that ownership after I moved on - it would just count as part of my savings and not be diversified.

So, rather different structures compared to how it works here. I'd lose my ownership and lose my say in the company that I'd left - it doesn't count so much as part of my savings as part of my income stream.